FocusS Korea polymer imports into Iran halted on sanctions

19 July 2012 10:03[Source: ICIS news]

By Ong Sheau Ling

SINGAPORE (ICIS)--Import activity in Iran for polyethylene (PE) and polypropylene (PP) resins has been at a standstill since the end of June because of US-led sanctions, restricting business from sole supplier South Korea, market players said on Thursday.

Iran had been importing high density PE (HDPE) pipe and PP copolymer grades from South Korea since March, when the US-led sanctions kicked in, preventing other suppliers to offer to Iran, they said.

“We have no idea at what price levels we should buy now, because we have no offers from the South Koreans at all,” an Iranian trader said.

South Korea stopped exporting HDPE pipe and PP copolymer material to Iran at the end of June as the country was still in negotiations with the US to be exempted as a buyer of Iranian crude oil.

“If only South Korea imports crude oil from Iran, then there will be cash generated from this trade to fund the insurance and vessels for exports of polymer resins to Iran in return,” a South Korean trader said.

“Our business to Iran literally has stopped,” another South Korean trader said.

Despite the import supply crisis, Iranian importers were able to cover their requirements domestically.

“Our customers are able to buy locally and at even lower prices compared to potential price levels for imports,” another Iranian importer said.

Before the import supply crunch, selling ideas for various HDPE pipe grades of South Korean origin were around the $1,500s/tonne CFR (cost and freight) Iran, on par with PP copolymer grades, traders said.

Such price levels were deemed the highest compared to Asian markets because of the tight availability, they added.

“Although we can procure locally, it is still not sufficient to cover our demand,” a third Iranian trader said.

Iran does not have any local production of HDPE pipe black grades and PP random copolymer, and hence, are dependent on imports only. On a monthly basis, the country’s total polyolefins imports range between 30,000 to 50,000 tonnes, market players said.

This lingering concern for imports by Iranian importers may have to continue until September after Iran resumes its export of crude oil to South Korea at the end of August, South Korean traders said.

“We are not sure when we can import again,” a fourth Iranian importer said.

A South Korean supplier said: “It is difficult time for both the [South Korean] suppliers and the [Iranian] buyers.”